Leaderboard Zone

NYT Monday had this story on a “trend” in search – pay per call. Idea is that marketers will create a market in which calls become the performance metric. I can see it, but not devoid of a website and not without some troubling implications for organic search results. I do think the integration of search, voice and web is a big story, especially w/r/t mobile platforms. …

I’ll be at the D conference for the next day or so. Reports will be sporadic, as there is no wireless net – I’m told Walt prefers his ballrooms blog and keyboard free.

In any case, Gates was the featured luminary after dinner tonight. Furthering previous announcements about cleaning up MSN’s search practices and clearly biting his tongue (or sitting on his hands, take your pick), Bill Gates tonight parried Walt and Kara’s spirited questions regarding MSFT’s search strategies with a bit of guile, some well chosen words, and a dash of humor, in particular as it related to Google (“Oh, there’s nothing they can’t do!” he joked in a mock fawning voice), a company he recently acknowledged had kicked Microsoft’s collective butt when it comes to search.

Tonight he was not as charitable – at one point saying MSFT’s goal was to be the best in search. He jokingly advised the crowd to buy Google stock and coyly refused comment as to whether he thought Google’s advantage lay mostly in marketing. He did note that the Google and MSFT culture were pretty similar (is he reading my blog!?). Some tantalizing hints came as Walt asked him about paid inclusion and the like. He repeated that Microsoft will clean up its search practices, but he seemed to hint things would go a bit further than that.

“They have a way of formatting things that has had some appeal,” Gates said. “It will be matched.”

“Web search is a incredible business,” he continued. “(But) If you want to find things that are local…it’s terrible today. If you want to find things that are of particular interest to you, it is quite terrible today.”

Gates blamed search’s shortcomings on its keyword-based approach, and argued that natural language and contextual semantic approaches will be the next leap forward.

Gates also reviewed the Longhorn strategy, at one point saying that the oft-delayed OS would be the most significant shift in Microsoft’s computing environment since the jump from DOS to Windows (the core shift being in data structures – the file system – Gates long-standing dream of having a more robust file system, which of course is a truly searchable and transportable file system.) He also mentioned that RSS and blogging was an area of particular interest within Microsoft.

UPDATE: Walt emailed me to take issue, in a nice way, with my statement about his view of blogging. He doesn’t want a blog or keyboard free ballroom, he reminds me, he wants a Wifi free ballroom, as he wants his audience to focus on the program as opposed to surfing the web or checking email. And he’s all for blogging, just not during the sessions.

My friend and past co-worker Andrew Anker has taken a role at Six Apart as EVP, Corp. Dev. This means a lot to me, not only am I a big fan of both AA and SA, I take it as a sign that SA is getting serious about building out their a platform to grow as this nascent industry grows, and that’s a good thing. There is tons of work to be done on both the revenue and product side of blogging, and it’s heartening to to know the team at Six Apart will be on the case.

Remember that period of time in the history of search? As I review my notes from talking to folks like Monier, Gross, Cutting, and others, I’m reminded of just how terrible search was back then. Spam – mostly porn – was rampant, and search was pretty much ignored in favor of stickiness. Search was considered “good enough” – and of course it was not. That opened the door to innovation – Google and Overture launched in 1998. So here’s my lazyweb request for the day: any readers have great stories of search engine spam, or frustrations with corporate bosses missing the boat over search in the late 90s?

Gary Price of ResourceShelf interviews Gary Flake of Yahoo Labs. I’ve spent a number of very interesting hours with Flake, the interview makes for a good introduction to his way of thinking. Also see the extended interview, here…

Excerpt:

RS: Now, an obvious question. What’s wrong with web search today?
GF: It’s easier for me to point to what web search should be and then highlight the differences. If web search was perfect, then it would produce an answer to every query that would be as good—or better—than if the smartest people in the world had as much time, data, and contextual information (about the user) required to fulfill the query; and it would do all of this in a split second. In other words, the search engine would be an artificial intelligence (AI) so smart that if a correct answer could be found in theory with close to infinite resources, then it would find it. If a correct answer did not exist, then the search engine would give you the next best thing: an approximation, or perhaps even an explanation as to why your query has no perfect result. (And by the way, if we realized all of the above within my lifetime, I would consider myself lucky. That should give you an idea of what sort of time frame I am talking about.) Alternative interfaces, like cell phones, voice, and snazzy graphical results are all nice, but in the end they represent relatively easy technology problems when compared to the challenges involved in realizing our hypothetical search engine. What really matters is what is under the hood.

Marc A. and a number of other notables gathered for a panel last week sponsored by USA Today, and one thing Marc said neatly summarizes one of the key trends that makes Web2.0 so different from Web 1.0:

Andreessen: In the middle of what was a pretty horrific recession we now have 10 times more people on the Internet now than we did five years ago. We’ve got 10 times or a hundred times more broadband. We’ve got Internet advertising, which is a real phenomenon. We have a whole generation of citizens now used to doing business online, used to buying things online, and used to communicating online.

On the technology side, we’ve had over that period about a 10 times reduction in price in a lot of components that go into building the Internet and building services on the Internet, like servers and software and networking equipment.

All that’s really adding up. The economics of the Internet have undergone something like a thousand-times swing. If you’re going to launch an Internet site or an Internet business today, it’s probably going to cost about a tenth of what it would have cost five years ago, but you’re going to have 10 times more consumers you can address and probably 10 times the advertising revenue. There’s a seriousness and commitment and dedication and effort and investment going into it now that is a lot more interesting and a lot more real than what was happening in the ’90s.

Also, scroll down for Jurvetson on search, he mentions an interesting sounding company called Tacit….

Safa Rashtchy’s weekly newsletter makes two good points: first, online advertising will grow faster than most think, as major spenders migrate to the web in the next year, and second, paid search has become a distribution network, not just a advertising buy. In other words, as Google VP/Advertising Tim Armstrong pointed out to me in an interview for the book, search has moved marketing from the “expenses” side to the ledger to the “revenue” side – through paid search, marketing becomes sales.

From the newslettter:

The growth in online advertising is the most interesting one since it is rapidly accelerating and we expect it to continue to grow at a faster rate in 2005. Currently, we expect the 2004 growth rate to be at least in the range of 20%-25% and a faster growth rate in 2005, as more advertisers move online. We expect the combination of the three factors will be pushing this growth rate to 30%-50% over the next few years: 1) increased allocation of ad dollars from existing advertisers, 2) addition of new online advertisers, and 3) price increase. Currently, we estimate prices are in approximate parity, on an average basis, with offline media but we expect that overtime, online inventory can get a 20%-50% premium over comparable reach from traditional media.

Search, which we continue to believe must be regarded separately from advertising because of its unique dynamics, should continue to grow at 40% rate in 2004 and very likely maintain that rate in 2005, driven by international growth. Paid search has become the most effective direct marketing technique ever developed and has become a distribution network, not just a form of advertising, for tens of thousands of small merchants, as well as countless major online businesses. In fact, search’s ability to aggregate supply and demand has effectively made the search destinations as online shopping malls. The local search initiatives are likely to create another leg of growth for search in the 2005-2006 time frame.